I would also strongly recommend Steven Kates’ Free Market Economics. An Introduction for the General Reader which is in countless ways one of the best introductions to economics ever written; and this assessment includes amongst other things the author’s superb ability to put economics into perspective in terms of the history of economic thought.
I keep going back to this fantastic book. Lucidly written, it can be read with tremendous gain (to students of economics of any level, beginner to advanced scholar) in a few days, maybe even in just two days. At the same time, it is so substantial as to invite countless returns for further appreciation.
As a person strongly influenced by the Austrian school (including its post-Misesian anarchist wing), what gives me a special kick is the fact that the author, who ‘heretically’ recognises a substantial role for government and the state, offers an accurate and brilliant account of a free economy.
Of course, this places Kates much closer to (the great Austrians) Mises and Hayek than to the anarchist successor school, whose anarchist stance I do not share at all, while recognising the school’s considerable intellectual achievments.
I hope Georg Thomas won’t mind my retrieving his kind and generous comment from the thread that followed my putting up a reading list in the history of economics the other day. And I hope you won’t mind if I say that this is how I think about the book myself.
Moreover, the book is, in my view, unique. It explains everything found in an introductory text on economics but in no chapter is its explanation the same. Everything is saturated in the role of the entrepreneur and builds from the crucial importance of uncertainty.
It never assumes there is no government, but instead assumes that there is and that this government will make laws and regulations that are sometimes a net benefit but are also usually the very reason economies underperform and all too frequently fall into recession.
It explains value added across an entire chapter. The fact of the matter is that without understanding value added properly it is impossible to understand good policy from bad. And so far as I know, this book is unique in explaining this crucial part of economic reasoning at the introductory level.
In teaching supply and demand it assumes no one can ever know where either of those curves actually is, a very different way of thinking about markets. The traditional form of marginal cost pricing is shown to be an inane framework that provides no insight into how either prices are set or volumes determined. Instead it explains the margin as the dividing point between the present and the future which the farther into one looks, the less that one can know anything relevant about what is going to take place.
It disdains Keynesian economics even while explaining modern macro, showing why it is an insulting form of nonsense, and I might add, is the only book to my knowledge anywhere to do so. If you know of another written within the last forty years, you must let me know.
Instead, it explains prosperity and recessions using the classical theory of the cycle which was based on a proper understanding of Say’s Law. It is definitely, and I do mean definitely, the only place in the world you can find out about Say’s Law and how Keynes mangled its interpretation leaving the world’s economies in the mess they are in with no theoretical guidance system with which to find our way out.
And as the title makes clear, the point of the book is to explain why there is no other means to manage an economy than through the free market which is not the same as laissez faire.
How to Get the Book
The book is available in paper from the Edward Elgar catalogue for £23.96. And if you would like to read it in an electronic format, this is where you should go which is taken from the Elgar website:
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Here is the link to the google ebooks in the UK where the price is a mere $A29.00.